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Who is eligible to pay the Levy?

The Levy applies to both public and private UK employers across all sectors with a payroll bill in excess of £3m a year.

How much is the Levy?

It is set at a rate of 0.5% of the total payroll and is collected monthly via PAYE. There is a £15,000 fixed annual allowance for employers to offset against their Levy payments, and the Levy allowance operates on a monthly basis. This means you'll have an allowance of £1,250 a month, and unused allowance will accumulate over the year. The government tops up all Levy pots by 10% meaning for every £100 you put in, the government will add £10 for free.

What can Levy funds be spent on?

Levy funds can only be used towards the cost of Apprenticeship training and end-point assessment with an approved training provider. It can't be used towards an apprentice's wages or wider training programme.

How can employers spend their Levy?

Levy funds once collected by HMRC are held in your 'Digital Apprenticeship Service' (DAS) account. Since January 2017, you can register to create your account. Employers are able to direct the funds held in these accounts to 'approved training providers' to pay for their Apprenticeship training.

How long do employers have to spend their Levy?

Levy funds will expire 24 months after they enter your digital account unless you spend them on Apprenticeship training - if you don't use them, you will lose them. This also applies to any top-ups in your digital account. For example, funds entering your account in September 2017 will expire in September 2019. Money is spent when it leaves your digital account as a payment to a training provider. The account works on a first-in, first-out basis. Whenever a payment is taken from your digital account it automatically uses the funds that entered your account first.

What happens if an employer's Levy funds don't cover the cost of the training?

If you don't pay the Levy, or your funds don't cover the full cost of the Apprenticeships you would like to buy, additional government support will be provided to help you meet the additional costs up to the maximum amount of funding available for that Apprenticeship. You'll also be expected to make additional contributions for the extra amount you'd like to spend. The contribution by the government will be 90% and as an employer you will contribute an extra 10%.

Download the Levy factsheet

Take a more detailed look with our Levy factsheet.

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